SPW MarketWatch: October 2024
- 08 November 2024
- 5 mins reading time
FactSet, 7 November 2024. Figures are monthly price returns in local currencies for October 2024.
Note: Past performance isn't a guide to future performance and may not be repeated. The sectors, securities, regions, and countries mentioned are for illustrative purposes only and are not recommendations to buy or sell.
UK
UK shares fell over the month (1). UK companies of all sizes were negatively affected by the mixed near-term external macroeconomic outlook, with UK small and medium companies underperforming in particular.
Later in the month, UK markets were further impacted by Chancellor’s Rachel Reeves’ budget announcement due to concerns about the longer-term UK economic and interest rate outlook as a result of the measures announced in the budget (2). Whilst the Office of Budget Responsibility (OBR) upgraded the near-term UK growth forecast, the benefit to long term productivity was judged to be limited. There is anticipation that interest rates would need to be higher for longer.
The pound also weakened – making it more expensive to purchase goods from abroad. This is despite a background of generally positive UK economic data, including news that inflation is now below the Bank of England's 2.0% target (3).
For more information on the budget announcement you can watch our ongoing advice client webinar here: Schroders Personal Wealth Webinars
Europe
Eurozone shares fell in October due to concerns about growth and uncertainty around the US presidential election outcome. The weakest sectors included information technology, consumer staples and real estate. Industrials and communication services sectors were the only sectors to do well.
Eurozone economic growth was 0.4% in the third quarter, up from 0.2% in the previous quarter. Inflation rose to 2.0% from 1.7% in September (3). The European Central Bank (ECB) cut interest rates by 25 basis points in October (4), however an uptick in inflation may mean less likelihood of rapid rate cuts to come.
US
US shares dropped in October due to uncertainty about the presidential election in November and interest rate concerns. Some of the large companies issued disappointing quarterly results which also negatively impacted markets. Healthcare, materials, and real estate sectors fell the most, while financials and communication services did well.
US GDP grew by an annal rate of 2.8% in the third quarter, slightly down from 3.0% the previous quarter. US inflation, as measured by the consumer price index (CPI), was at 2.4%, down from 2.5% in August (5).
Job growth surged in September with 254,000 jobs added (6). Many economists expect the US central bank to lower short term interest rates by 0.25%, the second rate cut following a 0.50% cut in September, in what is projected to be a string of rate reductions in the next year or so (3). All eyes were on the tight 5 November presidential election.
Sources:
(1) UK economy falls unexpectedly in October as higher rates bite - BBC News
(2) Budget poses new challenge for UK public finances, Moody’s warns
(3) Monthly markets review – October 2024, Schroders
(4) European Central Bank cuts rates for third time in 2024
(5) CPI Home : U.S. Bureau of Labor Statistics
(6) U.S. Employers Add 254,000 Jobs in September as Economic Growth Remains Solid - The New York Times
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